Advanced Micro Devices: Wells Fargo Likes the View From Road Trip

Wells Fargo chip analyst David Wong this morning writes that he’s been on the road with Advanced Micro Devices (AMD) Chief Financial Officer Devinder Kumar and the company’s head of IR, Laura Graves, meeting investors in San Francisco and Los Angeles--all of which reinforced his view the company is “positioned to show meaningful market share gains through 2018."

Wong notes broadly that a third of the company’s revenue is coming from new product, and that fully 40% of the companies revenue from personal computers is coming from its newer Ryzen chips, heading to 50% this quarter.

He sees good share gains as the company’s Epycchip moves to the next manufacturing “node”:

We think that AMD could achieve a 5% server processor unit share and perhaps a 3% server processor revenue by the December 2018 quarter. Should AMD successfully bring out it 7nm Zen 2 EPYC server family on time and if this product has competitive performance, we think that AMD’s server processor market share could rise to as much as 10% unit share and 6% revenue share by the December 2019 quarter.

He’s also encouraged with how forthcoming “dual socket” versions of Epyc will further eat into Intel’s (INTC) server market:

We do not know at this point if there will be a large shift from two-socket configurations to single-socket servers that leverage AMD’s single socket products. However, we think that AMD’s dual-socket EPYC offerings could very well drive the market share gains we are projecting for AMD even if customers do not gravitate to the single-socket products.

And here, Wong notes with approval the company’s development of innovative I/O chips to aid Epyc:

Separately, we are impressed with AMD’s success in engineering a connection fabric (AMD’s Infinity fabric) which allows the company to make multi-chip (four chips packaged together) solutions with comparable performance to Intel’s single-chip products. In the past, both Intel and AMD have brought out 2-chip solutions that in which there appear to us to have been meaningful performance shortfalls to 1-chip competing solutions. We think that the scalability offered by AMD’s superior connection fabric might turn out to be an important long term advantage of the EPYC family.

Wong notes the new products in the pipeline:

AMD has just introduced (January 2018) its first 14nm desktop Ryzen APUs (accelerated processor units) – processors with integrated graphics o The Ryzen desktop chips launched in 2017 were CPUs (central processor units – microprocessors with no integrated graphics in AMD’s terminology). These, in our view, addressed only a portion of the desktop processor market.  In January 2018 AMD also announced some additional Ryzen mobile chips and Ryzen Pro mobile chips for the commercial market.  In April 2018 AMD expects to launch its first 2nd generation Ryzen CPUs built on 12nm technology.  In 2H18 AMD expects to sample also its first 7nm Zen 2 EPYC server chips and also its first 7nm Vega chips (Radeon Instinct accelerator chips). o Our guess is that AMD’s first 7nm products will be manufactured at TSMC. AMD’s most recent renegotiation of its agreement with GlobalFoundries gave AMD flexibility to manufacture additional products at TSMC, although this arrangement does involve some payments to GlobalFoundries when AMD manufactures wafers at TSMC.

Advanced Micro Devices: Wells Fargo Likes the View From Road Trip

Wells Fargo chip analyst David Wong this morning writes that he’s been on the road with Advanced Micro Devices (AMD) Chief Financial Officer Devinder Kumar and the company’s head of IR, Laura Graves, meeting investors in San Francisco and Los Angeles--all of which reinforced his view the company is “positioned to show meaningful market share gains through 2018.

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